The QBI for Each Business Is Subject to the Greater

question 123

Multiple Choice

The QBI for each business is subject to the greater of two limitations: (1) 50% of W-2 wages ($20,000, or $40,000 x 50%) or (2) 25% of W-2 wages plus 2.5% of unadjusted basis {$40,000, or [($40,000 x 25%) = $10,000 + ($1.2 million x 2.5%) = $30,000]}. The greater of the two limitations is $40,000. Because this $40,000 is less than Patricia's tentative $50,000 QBI, the lower amount must be used. Patricia's QBI for this trade or business, then, is $40,000.
-At the beginning of the year, Elsie's basis in the E&G Partnership interest is $90,000. She receives a proportionate current (nonliquidating) distribution from the partnership consisting of $10,000 of cash, unrealized accounts receivable (basis of $0, fair market value $40,000) , and land (basis of $30,000, fair market value of $50,000) . After the distribution, Elsie's bases in the accounts receivable, land, and partnership interest are:

• A) $0; $30,000; and $50,000.
• B) $0; $50,000; and $30,000.
• C) $40,000; $30,000; and $10,000.
• D) $40,000; $40,000; and $0.
• E) $40,000; $50,000; and $0.

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Definitions:

Market Segmentation

The process of dividing a market of potential customers into groups, or segments, based on different characteristics such as demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better tailor marketing strategies.

Limited Marketing

A strategy that involves targeting a specific market segment with a concentrated and streamlined marketing mix.

Market Fragmentation

The division of a market into smaller segments with varied preferences, characteristics, or needs, often resulting in increased competition.

Mass Marketing

a marketing strategy that targets a large, general audience with a uniform message, rather than tailoring messages to specific demographic or psychographic segments.